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You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

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Bumi Citra Permai

The name of Bumi Citra Permai (BCIP) most probably
doesn’t ring a bell, but the company just released its first half financial statements,
which at a glance shows impressive results. The net profit increased more than
twice, the annualized ROE 25.5%, and the PBV was just 0.5 times at the price of
Rp125 per share. Is it a jackpot opportunity?

BCIP is a
small-scale property company (if compared to other property companies on the
IDX) with only one major asset, namely the 400 hectares Millennium Industrial Estate (MIE) in Cikupa, Tangerang, Banten
Province, which is about 36 kilometers from downtown Jakarta. The estate sells
industrial plots, office buildings, warehouses, and shop houses. As of the
second quarter of 2017, BCIP posted a total asset of Rp830 billion (US$ 58
million), and still has 10 lots of land, and 3 units of building available for
sale. BCIP also has one subsidiary engaged in clean water management, but its
contribution to the company's total income is not significant, only a few
billion Rupiah per year.

Since long ago, the common
problem faced by property companies specializing in industrial estates is that their
financial performance is not consistent
from time to time. Because not like selling residential property where there
will always be people who need a place to live, the sale of industrial lots is
much more difficult because not even every year the developer could find a
company that needs land to build a factory. This is also the same problem for
BCIP, and as a result its earnings in the last five years were not stable at
all. In 2013, BCIP posted a profit of Rp30 billion, which later dropped to Rp5
billion in 2015, before rising once again to Rp49 billion in 2016.

So even though the
company successfully booked Rp44 billion in net profit in the second quarter of
2017, there is no guarantee that the profit will increase to Rp88 billion by
the end of the year, instead it could be slightly reduced (due to operating
expenses), ie if BCIP fail to find new buyers for its lots of land until the
end of the year, and unfortunately the company does not have other sources of
income, and the management also have no plan to diversify/develop business. For
the long term, BCIP actually has a plan to add 200 hectares of land for MIE (the
land already exists), but still waiting until lots in the original area were
sold out, and that could take a long time.

So, if for serious
investments in the long term, BCIP is not recommended. In addition, from the
beginning of 2013 to mid 2016, BCIP also rose unreasonably from 200 to 1,300,
before slashed to 100 in just four months (the movement is similar to pump and
dump scheme of Trada
Maritime (TRAM), and Sekawan
Intipratama (SIAP)). There is also news that BCIP is involved in default case
of medium term notes (MTN) which were issued by a company called PT Berkat Bumi
Citra (BBC), with a guarantee of BCIP's industrial estate. And even though the
management has denied that they have affiliation with the BBC, the case is still
in progress. And finally, the company sometimes late in releasing its financial
statements. In short, in terms of management credibility, BCIP is doubtful.

However, the fact is
that BCIP's latest financial performance is quite good, and the stock valuation
is low. I actually observed the stock since the beginning of 2017, when the
decline was stopped at 106 (from 1,300’s), and later the stock bounced to 240
before drop once again, and eventually stable at the current price range. Normally,
if there are small companies with illiquid stocks such as BCIP, the long term prospects
are not clear, and the quality of management is also not convincing, investors
will not be interested at all, and the price may go down until bottom price of
Rp50 per share. But on the other hand, BCIP's latest earnings aren’t bad, while
the stock valuation is also discounted. So I think, unless there is a certain
force majeure, then BCIP will not drop to 50. Plus, don't forget that the
sector that will be hot is property,
and BCIP is indeed a property company.

So even though this
BCIP, once again, is not recommended for serious investment for the long term,
but the stock still offers short-term trading opportunities, of course with
advice that you do not use too much funds (to put US$ 20,000 in the stock is already
too big for BCIP, so you should use less than that). I myself once interested
to buy the stock when it fell to 70s (probably because of invisible market correction,
you can read
the explanation here), because before that it was always sideways in the
100's (and that is a reasonable price range, because as mentioned above, BCIP
does not have a reason to drop to Rp50 per share), but unfortunately it
immediately flew to 130's, not long after the financial statements came out.

But by considering
the market conditions etc., then I think the best price for BCIP is in the
range of 100 - 110, or slightly below. And of course, you have to take a look
at the financial statements, and let’s hope that in the next quarters, the
company is able to maintain its earnings.

PT. Bumi Citra Permai, Tbk

Rating of First Half
Performance: A

Rating of Stock
Price at 125: A

Original article was written and published (in
Indonesian Language) on October 6, 2017. Any inquiries contact the author
(Teguh Hidayat) by email teguh.idx@gmail.com.